What are 'embedded emissions' and can global trade help reduce them?

Author: Robin Pomeroy
Published: Thu 04 Sep 2025
Episode Link: https://www.weforum.org/podcasts/radio-davos/episodes/embedded-emissions-trade

The European Union is implementing a 'Carbon Border Adjustment Mechanism' (CBAM) that will levy a fee on importing certain goods that are produced in countries that lack regulations forcing producers to cut their greenhouse gas emissions.

It's an idea that other countries are considering, but is also hugely complex and may be challenged by exporter countries. Two expert guests explain the policy and its implications for business and global trade.

Speakers:

Aaron Cosbey, Senior Associate, International Institute for Sustainable Development (IISD)

Dandy Rafitrandi, researcher at the Department of Economics, Centre for Strategic and International Studies (CSIS), Indonesia

Kimberley Botwright, Head, Sustainable Trade, World Economic Forum (co-host)

Links:

World Economic Forum Centre for Regions, Trade and Geopolitics: https://centres.weforum.org/centre-for-regions-trade-and-geopolitics/home

Emissions in trade: Where are they and how do we measure them?: https://www.weforum.org/stories/2025/03/emissions-in-trade-how-we-measure-them/

CBAM: What you need to know about the new EU decarbonization incentive: https://www.weforum.org/stories/2022/12/cbam-the-new-eu-decarbonization-incentive-and-what-you-need-to-know/

What future for climate and trade? Scenarios and strategies for carbon competitiveness?: https://www.weforum.org/publications/what-future-for-climate-and-trade-scenarios-and-strategies-for-carbon-competitiveness/

Countries must deal with imported emissions in a fair and flexible way: https://www.climatechangenews.com/2025/08/27/countries-must-deal-with-imported-emissions-in-a-fair-and-flexible-way/

European Commission on CBAM: https://trade.ec.europa.eu/access-to-markets/en/news/carbon-border-adjustment-mechanism-cbam

International Institute for Sustainable Development: https://www.iisd.org/